Throw the Bums Out, Global Edition

By Ruchir Sharma

June 22, 2017

Only a few weeks ago, much of the global commentariat still saw the rise of right-wing populism as the defining trend of our times, but recent election results upend that notion. This month an old-fashioned socialist, Jeremy Corbyn, scored an unexpectedly strong showing in Britain. On Sunday, the new-school centrist Emmanuel Macron won a parliamentary majority in France. And conservative, Wall Street-friendly reformers are gaining momentum in, of all places, Latin America, once a hotbed of anticapitalist radicalism.

If there is a common factor driving voters worldwide, it is less a particular ideology, right or left, than a deep but amorphous desire for change. Seated leaders normally have a huge advantage in name recognition alone, but these aren’t normal times. In the world’s 50 most populous democracies, the ruling party won just 40 percent of the national elections in 2016. It was one of the poorest showings for incumbents since 2002, when the global economy was emerging from recession and roiling crises were driving established parties from power in the emerging world.

So far this year, in five major national elections, the incumbent party suffered humiliating defeats in France and South Korea, will barely hang on at the head of coalition governments in Britain and the Netherlands, and survived with a greatly diminished mandate in Ecuador.

The voters’ anger is mainly the byproduct of the wide and persistent slowdown that has taken root since the global financial crisis of 2008. The growth rate of the global economy has slumped to around 2.5 percent this decade, from 4 percent in the decades before 2008, undermined by weakening growth in both population and productivity. No major region of the world is growing as fast now as it was before the crisis. Among the 50 most populous democracies, only nine have dodged the global growth slowdown, and among this group — with a few exceptions, like Germany — most have relatively small economies.

Worse, the disappointing recovery has been accompanied by anemic wage growth and rising income inequality. Dashed economic expectations are undermining popular support for working politicians across the economic spectrum.

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Supporters of the Labour Party used placards to shelter from the rain in London last month.CreditNeil Hall/Reuters

Based on polls in the 20 large countries for which long-term poll data is available, the median approval rating for national leaders is now just 35 percent, down from 54 percent a decade ago, when the global economy was still booming. In recent years, approval ratings in countries like Taiwan and Brazil have fallen as low as the single digits — lows I can’t recall seeing before in any country.

Voters are directing their anger at whoever is in office and casting their lot with whoever offers something new and different.

In the United States and Britain, where millennials have little experience of socialism or personal memory of what it produced in the Soviet era, many young voters are inclined to see socialism as something new and positive. That may help explain the striking level of youth support for Bernie Sanders, a self-described democratic socialist, and Mr. Corbyn, who both won clear majorities among voters under age 34.

In many Latin American countries, however, left-wing governments were in office until recently, with poor economic results. These economies stumbled when commodity prices went bust earlier this decade, so in recent elections voters have turned to center-right reformers like Pedro Pablo Kuczynski of Peru and Mauricio Macri of Argentina, who outraged many on the Latin left by appointing numerous veterans of Wall Street to key economic posts. In Chile, the front-runner in the race for president this year is a conservative billionaire and former president, Sebastián Piñera.

However, this does not suggest that the right is rising uniformly across Latin America, either. In Mexico, the center-right president, Enrique Peña Nieto, has seen his approval ratings sink below 20 percent as the economy struggles to gain speed, and the leftist firebrand Andrés Manuel López Obrador has emerged as the front-runner to win the presidential election next year.

In France, the socialist government of François Hollande was seen as a dismal failure, and his party went on to take just 29 of 577 seats in the National Assembly compared with more than 460 for center and center-right parties — perhaps the most resounding victory for pro-market forces since the dawn of the Fifth Republic in 1958. Despite low voter turnout, the biggest winner was Mr. Macron, a centrist economic reformer who plans to push France to the right and downsize the welfare state.

Right-wing reformers are rising where left-wingers ruled, progressives are rising where conservatives held power, and unconventional populists are gaining in countries where the traditional parties are especially weak. It is hard to recall a time when the world was more ideologically scrambled, or when politics was more polarized in big democracies, from the United States to India.

While global economic momentum has picked up somewhat over the past few months, the gains are still marginal. The forces driving the post-crisis slowdown are too deeply rooted to be fixed quickly by any political leader.

If anything, the honeymoon period for the recently elected may be shrinking, as several relatively new leaders have already seen a meaningful decline in their popularity, including Justin Trudeau of Canada, Tsai Ing-wen of Taiwan, Malcolm Turnbull of Australia and Mr. Kuczynski in Peru. None of them has been in office even two years, yet all have a negative approval rating; President Trump, who rode the anti-incumbent wave to victory, has seen his ratings go from weak to weaker in office.

Of course, there are exceptions to the anti-incumbent revolt, owing to idiosyncratic local factors. A few leaders still have high approval ratings after more than 15 years in power, such as President Vladimir V. Putin in Russia and President Recep Tayyip Erdogan in Turkey. But it is hard to trust polls in these illiberal nations.

In genuine democracies, very few leaders remain genuinely popular. Chancellor Angela Merkel of Germany is one. Under Ms. Merkel, Germany has enjoyed the highest per capita income growth of any major developed country, so her ratings are easy to understand.

Exceptions aside, given how often incumbent leaders are losing re-election campaigns, and how many suffer from record-low approval ratings, the confusing pattern of recent election results seems best explained not by the rise of any one ideology but by a sentiment now common to voters all over the world: When in doubt, just throw the bums out.

Ruchir Sharma, author of “The Rise and Fall of Nations: Forces of Change in the Post-Crisis World,” is the chief global strategist at Morgan Stanley Investment Management and a contributing opinion writer.